Opinion: Dubai Air Show Final Day

While it’s been a week now since Dubai Air Show had ended, much of what happened during the event are still being talked about until this day.

This article is a follow-up to my previously published article here.

Below are the noteworthy deals during the Dubai Air Show 2017

OEM (Airbus/Boeing) Customer Value (list price) Details
Boeing Emirates US$15.1bn Commitment for 40 Boeing 787-10 Dreamliners
Airbus Indigo Partners US$49.5bn Order for 430 Airbus A320neo family (274 A320neo + 156 A321neo) with the following breakdown:

  • Wizz Air 72 A320neo + 74 A321neo
  • Frontier Airlines 100 A320neo + 34 A321neo
  • JetSMART 56 A320neo + 14 A321neo
  • Volaris 46 A320neo + 34 A321neo
Boeing flydubai US$27bn Deal for 225 Boeing 737MAXs:

  • Commitment for 175 planes
  • Purchase rights for 50 more
Boeing and Airbus via AerCap EgytpAir Lease agreements with AerCap and EgyptAir:

  • 6 Boeing 787-9
  • 15 Airbus A320neo

There were some other noteworthy deals during the event, but I will focus on the above three.

While the Dreamliner order is totally unexpected for me, it makes real sense if we consider how Emirates plans to use them in the future – that is, to develop markets that are too thin for the A380 or B777 to serve. I was expecting Emirates to reorder the Airbus A350, likely the -900 variant, as replacement of its retired A330s. But decisions had been made, and it went to the other side of the competition.

The Emirates and flydubai’s Boeing orders translate to thousands of US jobs in the next decade or so. Could these deals be Emirates’ ticket to tapping more of the US market?

Let’s look briefly at the numbers:

Out of Emirates’ 2016-17 full year revenue of AED83.7bn (over US$22), only 14.9% comes from the Americas (North and South) while it’s almost double each for Europe (28.5%) and East Asia+Australasia (27.0%) regions.

Below are the biggest US carrier’s 2016 revenue:

Airline/Group 2016 Revenue Source
United US$36bn+ Link
Delta US$39bn+ Link
American Airlines US$40bn+ Link

While there are other factors in play, we can say that there’s a huge market to be had for others to take. While the gulf carriers (Emirates, Etihad and Qatar) do not have rights to fly within US cities via the eight freedom rights (for example, LAX to JFK), they are banking on their nonstop flights between their middle east hub to their US destination. In fact, they use their latest and best aircraft. For example, Etihad and Emirates both fly their Airbus 380s double decker to JFK. That’s hurting the US3’s profits. It does give us, travellers, more options when flying out of the United States. Of course, I have full respect for the major US carriers, especially Delta.

Now going back to the Dubai Air Show, unfortunately or fortunately, depends on who you work for, Airbus had an answer ready for Emirates’ double whammy to Airbus – the deal with US-based private equity firm Indigo Partners. A whooping US$49.5bn deal, the biggest single order in the aviation industry. While other observers undermine the capability of Airbus to deliver such a sheer number of single-aisle aircraft within reasonable period of time, I’d like to take it as it is – a huge single order. From an American firm at that.

The flydubai order further cement’s the airline’s stance to remain an all-Boeing low cost carrier. It may eventually become Emirates’ regional partner, pretty much like how Cathay Dragon is for Cathay. While being all-Boeing or all-Airbus is not completely new, it’s a rare business model. Japan Airlines, for example is currently all-Boeing, until its new Airbus 350s get delivered. Sri Lankan Airline is all-Airbus. SouthWest (US) is all-Boeing. Swiss Int’l Air did not have Boeing in its fleet prior to the entry of the B777s. It may be risky to have a homogeneous fleet, but it may be more economical when it comes to employee training and maintenance.

If you have a mix in your fleet, you can send the appropriate type of aircraft to a route. While if it’s just one type, you’re likely limited with options. Imagine if an aircraft is grounded for safety reasons!

So while the Dubai Air Show is an event where UAE-based airliners (mainly Emirates) would want to dominate, it ended up not being the case. But that doesn’t necessarily mean it’s over between the two. Or between UAE and Airbus for that matter. It’s far from that.

Emirates and Airbus are likely to continue negotiating for the A380. While analysts say Airbus should now stop producing the superjumbo, I believe many airlines, the likes of Emirates and a handful of Asian carriers such as Singapore Airlines, Korean and Asiana, have found a sweet spot with their A380 fleet. For us, passengers, after experiencing the gentle giant, you’d likely want your next flights to always be with the A380. While others may only see the numbers and economics of things, passengers see the comfort and experience. And we hope that Emirates and many more airlines will continue their interest on the A380. And I’m sure they will. And let’s hope the A380 will stay for as long as it can, even replicating the longevity of the Boeing 747. And who knows, some of the US carriers will soon consider this aircraft.

What is it for us, the flying public?
Well, there’s not much we can do to influence the decisions of buyers and investors. We can only hope that they have done their assignment before putting their money, heaps of them, on an aircraft of their choice. After all, it’s the public that gets to fly on those aircraft.

There’s not a single best aircraft that fits all business models of all airlines. There are a few beautiful aircraft available in the market – the Airbus A380, the Boeing B747-8I, which I love both and the new generation Airbus A350 and Boeing 787 Dreamliners, which seem promising for airlines’ profitability and passenger comfort. Then there’s the Boeing B737MAXs and A320neos, which support thin domestic and regional routes for FSCs (full service carriers) and LCCs (low cost carriers) alike.

For us, travellers, don’t we all want to reach our destination, safe and sound, whether the airline makes a profit or not?

Francis

Author: Francis

Francis is an aviation fan. He loves to travel for the flying part of it and to plane spot during stops. He likes to express his views about some aviation industry news, from the perspective of a regular traveller. Finally, he writes anything that he thinks can help others make the most out of their flights.

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